Apple likely to reduce the price of iPhone 5s in India to Rs 15,000

With this aggressive pricing, Apple will be able to compete squarely against the online exclusive models of Motorola, Xiaomi, Lenovo, Oppo, and Samsung.Writankar Mukherjee | ET Bureau | May 09, 2017, 07:57 IST

KOLKATA: Young India’s most visible symbol of mobility up the consumption ladder, the iPhone, might become a little less exclusive: A dated smartphone model, the iPhone 5s, may now be sold online at a price point that would help expand Apple’s loyalty base in the country.

The Cupertino, California-based company will likely price the four-year-old iPhone 5s around Rs 15,000 apiece as part of an online-exclusive retailing strategy, which aims to secure for the world’s most valuable corporate a beachhead in India’s mid-priced smartphone market that is dominated by Chinese manufacturers and Samsung.

Three senior industry executives said that the company’s distributors have already informed the brick-and-mortar cellphone stores that iPhone 5s supplies will be eased out, and that the model would be sold only online - at an aggressive price point. The iPhone SE will become the entry handset for offline retail in India for Apple, carrying a price tag of Rs 20,000, they said. The iPhone 5s currently sells at Rs 18,000.

“Apple wanted to have one iPhone model with an aggressive pricing in India and was banking on the company-certified refurbished models. But now that the proposal has been struck down by the government, it is betting on the iPhone 5s,” said one of the executives. Another executive said the move will also help Apple continue the high pace of growth in India since iPhone sales typically start flattening out from around May-June until the launch of new models around October. Online sales account for 50-55% of iPhone sales in India, compared with about 30% for the industry.

With this aggressive pricing, Apple will be able to compete squarely against the online exclusive models of Motorola, Xiaomi, Lenovo, Oppo, and Samsung. An email sent to Apple India did not elicit any response until the publication of this report. The company has been selling the iPhone 5s in some of the emerging markets to gain volumes. As per the Hong Kong-based market tracker Counterpoint Research, iPhone 5s accounts for around 20% of iPhone shipments into India.

Counterpoint Research associate director Tarun Pathak said placing iPhone 5s as online exclusive makes sense for Apple, considering that the mid-end smartphone segment is the fastest growing in India.

The Rs 15,000-20,000 segment expanded at 158% in the January-March quarter, driven by Samsung, Oppo, Vivo, Gionee and Motorola. This compares with a 15% growth in overall smartphone sales. The premium segment — Rs 30,000 and above — has been Apple’s mainstay in India, and this segment also expanded at a slower pace of 35%: The Rs 20,000 to Rs 30,000 price bracket, where Apple used to start its iPhone offering in India, expanded just 10%.

Another executive said Apple wants a larger pie of the Rs 15,000-Rs 20,000 segment and iPhone SE too will operate in that price bracket in phases through cashback offers. “The company will have a 10-12% pricing advantage for iPhone SE once it starts assembling it in India by next month,” he said.